Network Design Study Unveils $10M in Savings
The food distributor’s existing supply chain network occurred somewhat unintentionally through multiple acquisitions over several years. The result was an uncoordinated, patchwork network of distribution nodes with unrealized synergies and untapped volume leverage. In particular, the various DCs utilized a high level of LTL shipments due to low ship weights leaving the docks.
Kenco conducted a weeks-long network optimization study using our in-house team of supply chain design experts. Working in close collaboration with the customer to collect and clean data and fine-tune the business requirements inputs, Kenco completed the analysis and delivered significant findings and recommendations to the food distributor.
Kenco recommended consolidating and reducing the current network to 5 DCs to cover the major regions. Pairing this with a shipment profile analysis, we determined that the consolidated network would enable a significant mode shift as LTL orders were consolidated to a smaller number of full truckload shipments. Through our optimized network design, Kenco discovered a savings potential of $10 million, representing an 18% reduction of the current (baseline) costs. Kenco also estimated a 15% reduction in carbon emissions by eliminating excess shipments.